Key Takeaways:
Hong Kong is deepening cooperation with the Shanghai Gold Exchange to build an international gold trading hub, Financial Secretary Paul Chan said Wednesday, as the city strengthens its role in China's push for financial-market opening.
"Hong Kong and Shanghai should give full play to their complementary strengths and work in synergy to jointly serve the country's high-level two-way opening-up," Chan said at the Lujiazui Forum in Shanghai, according to a government statement.
The cooperation builds on a mechanism established this year between Hong Kong and the Shanghai Gold Exchange. More than 70 percent of mainland stocks held by foreign investors are allocated through Stock Connect, while about two-thirds of mainland bonds held by overseas investors are accessed through Bond Connect, Chan said. Some 212 Shanghai enterprises are listed in Hong Kong with a combined market capitalization exceeding HK$4.3 trillion ($550 billion).
The gold trading push aligns with China's broader strategy to boost the international role of the renminbi and give domestic players more influence over global commodity pricing. Vice-Premier He Lifeng told the same forum that China will steadily expand institutional opening-up in the financial sector and support Shanghai in developing offshore finance and building a global allocation and risk management center for renminbi-denominated assets.
The Shanghai Gold Exchange, the world's largest physical gold exchange by volume, processed more than 20,000 tons of gold in 2024, according to exchange data. A deeper Hong Kong-Shanghai gold link could channel more offshore liquidity into yuan-denominated gold products, strengthening China's pricing power in the global bullion market that has long been dominated by London and New York. The Shanghai Gold Exchange's international board, launched in 2014, already allows foreign investors to trade yuan-denominated gold contracts, and expanding that channel through Hong Kong could accelerate the renminbi's use in commodity settlement.
The gold initiative parallels a separate push into commodity pricing influence. The London Metal Exchange this week agreed a deal with the Shanghai Futures Exchange to use Chinese steel futures prices in a new LME contract launching in October, according to a joint statement. The SHFE hot-rolled coil contract traded 169 million lots in 2025, equivalent to 1.69 billion metric tons, dwarfing the LME's Chinese HRC futures volume of 139,109 lots. "This cooperation will further attract global steel enterprises and financial institutions to participate in price formation, and continuously enhance the international influence of China's steel futures products," SHFE Chairman Tian Xiangyang said.
Chan also highlighted that Hong Kong Exchanges and Clearing Ltd. and China Financial Futures Exchange will sign a memorandum of understanding during the forum. The China Securities Regulatory Commission announced support for launching trading of five-year renminbi government bond futures in Hong Kong, a move that could deepen the offshore yuan bond market and attract more international investors to mainland government debt. Overseas investors held about $600 billion worth of Chinese stocks by the first quarter, according to official data.
The cooperation follows the signing of the Shanghai-Hong Kong International Financial Centers Action Plan last year, which formalized a framework for joint development. Chan said the two cities should jointly enhance the international functions of the renminbi, enrich investment products and risk management tools, and promote more "China price" products denominated and settled in the Chinese currency. He also proposed that the two cities jointly open up full-chain fundraising channels for innovation and technology enterprises and develop exchange-traded funds and index products.
Hong Kong's gold hub ambitions come as the city competes with Singapore, London and Shanghai itself for precious-metals trading volume. The Shanghai Gold Exchange's international board saw average daily turnover of about 20 billion yuan ($2.8 billion) in 2025, according to exchange data. Expanding the Hong Kong link could significantly boost those volumes by giving offshore investors easier access to China's gold market through Hong Kong's established financial infrastructure.
This article is for informational purposes only and does not constitute investment advice.
